In this episode of The How of Business podcast, Henry Lopez and David Begin discuss the difficult topic of small business failure. They discuss a recent failure they have experienced with one of their small business locations. In June of 2016, they made the hard decision to close a poor-performing location of their self-serve frozen desserts restaurant business. In this episode they share that story, the reasons they decided to close this business location, and some of the lessons learned from this failed business location. Preparing for and dealing with business failure greatly determines your ability to succeed long-term as an entrepreneur.
- At the start of the episode we share a brief explanation of our scenario with this restaurant location, including the initial decision to start this business and why we chose this location to set the context of the episode.
- We discuss how we view and process failure. We want to believe that failure is normal, common and necessary…that we can learn most from failure. The reality for most of us, and certainly for us, however, is that when it happens it resurfaces deep-seated beliefs and emotions including shame and embarrassment and a diminished confidence in our abilities. We also discuss the emotional aspects of this failure.
- We believe that you have to plan to succeed, but be prepared to fail when you become your own boss.
- What did we learned from this business failure?
- What will we not do again and/or what will we do differently in our other and future small businesses?
- Was it a poor assumption that “remarkable customer service” would be enough of to differentiate us from the competition? We have certainly learned that if “better service” is our only differentiation, then we must proceed extremely cautiously when offering a relative commodity product.
- Were there signals or clues that we missed? We discuss some of the things we missed in selecting the location for this small business.
- Why did we decide to close this business location? What were the data points we considered? Whom did we seek counsel from?
- What was the impact on our staff, and how did that influence our decision?
- What is the potential impact on our brand, since we will continue operating this business at another location, and how did it influence our decision and how we executed?
- In this episode we mention learning from experts like Seth Godin and Tim Ferriss.
Books mentioned in this episode:
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